News Corp. More Than Doubles Earnings

By: Matthew Mogul, AP Business Writer

(AP) Solid advertising revenues at its U.S television stations, boosted by a national buzz over the program “American Idol,” helped Australian media conglomerate News Corp. to more than double its earnings and top Wall Street expectations.

Strong showings at cable news stations and book-publishing units also chipped in to help offset the drag from satellite, newspaper, and film properties in News Corp.’s vast stable of holdings.

For the three months ending Sept. 30, net income at the owner of the Fox News Channel, New York Post, and newspapers in Australia and England, was $162 million, or 12 cents per U.S. share, compared with $73 million, or 6 cents a share, in the same period last year. That compares with the 10 cents a share expected by analysts surveyed by Thomson First Call.

The results were released after market closed. News Corp. ended the regular session up 5 cents at $25.65 on the New York Stock Exchange.

Revenues also rose for the quarter to $3.81 billion from $3.40 billion during the same period of 2001.

The biggest revenue gains came in the company’s television businesses, which increased to $1.02 billion from $792 million a year ago. Operating income during the period more than tripled to $188 million from $52 million.

The increase reflects the success of some hot programs in the Fox family — roughly accounting for 75 cents of every dollar in revenue — like its top-rated talent search show “American Idol.” The company singled out automotive and fast-food companies as the principal drivers of its newfound ad dollars, a sign of better days ahead in retail ads, analysts said.

“Advertising and competitive ratings have gone up tremendously, adding up to a lot of extra revenue and not too much extra cost,” Rupert Murdoch, the company’s chairman and chief executive, told investors on a conference call.

The effects of an easy prior-year comparison when the Sept. 11 attacks depressed TV advertising also goes toward explaining some of the difference between last year and this one.

The Fox Sports Cable Networks, meanwhile, recorded an impressive turnaround, earning $12 million for the quarter after posting a loss of $8 million a year ago. News Corp.’s book publishing profit came in strong, with its marquee title, HarperCollins, surging 41% to $58 million.

Continuing to weigh on the bottom line, however, was the conglomerate’s satellite operations, which are outside the United States. First quarter losses were $96 million, compared with $83 million a year ago — in large part due to the inclusion of a $39 million loss in its Stream business. A $59 million loss in unrealized foreign currency charges related to debt at NetSat, due largely to a 30% dropoff in Brazil’s currency, the real, was also to blame.

Newspaper holdings also waded through a tough time as circulation revenue in Britain was hurt by steep price discounts at a main rival, The Sun. In total, the newspaper segment suffered a 23% drop to $57 million during the period.

The film unit, which holds movie studio 20th Century Fox, stumbled and saw a profit decline of 18% to $100 million.

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